What If You Can’t Pay CRA Right Away?

Owing money to the Canada Revenue Agency (CRA) can feel stressful — especially if you can’t pay the full amount right away. But here’s the good news: you're not alone, and the CRA offers several options to help you manage your balance without falling into deeper financial trouble.

In this article, we break down what happens when you owe the CRA, the steps you should take immediately, and how to avoid escalating penalties or collections.

What Happens If You Owe the CRA?

When you owe money after filing your tax return, the CRA expects payment by the deadline. If you can’t pay on time, here’s what usually happens:

1. Interest Starts Accruing Daily

The CRA charges compound daily interest on any unpaid balance. This continues until the amount is fully paid.

2. You May Receive CRA Notices

These notices remind you of your outstanding balance and encourage payment.

3. Collections Action (If Ignored)

If the balance remains unpaid for too long, the CRA can take further action, including:

• Freezing your bank account

• Garnishing your wages

• Holding future refunds or credits

• Placing a lien on property (in severe cases)

The sooner you take action, the more options you have — and the easier it is to prevent collections.

What To Do If You Can’t Pay CRA Right Away

1. Don’t Ignore the Balance

Ignoring CRA debt is the fastest way to increase penalties, interest, and stress. Acknowledging the issue early gives you the most flexibility.

2. Set Up a CRA Payment Arrangement

The CRA allows taxpayers to set up a payment plan so you can pay your balance over time, in smaller monthly amounts.

To qualify, you must:

• Show you cannot pay the full amount immediately

• Provide details about income, expenses, and assets

• Make consistent monthly payments

This is one of the easiest and safest ways to handle CRA debt.

3. Apply for Taxpayer Relief (Interest Relief)

If your financial difficulty was caused by circumstances beyond your control, you may qualify for taxpayer relief, such as:

• Interest relief

• Penalty cancellation

• Reduction of accumulated charges

Common situations include:

• Illness

• Job loss

• Natural disasters

• Financial hardship

A strong application can save you a significant amount of money.

4. File Your Taxes Even If You Can’t Pay

Many people delay filing because they fear the amount owing. This is a mistake.

Filing late triggers:

• Late-filing penalties

• Additional interest

• Higher CRA scrutiny

You should always file on time — even if you can’t pay right away. Filing prevents extra penalties and opens the door for payment arrangements.

5. Review Your Return for Missed Credits or Deductions

Sometimes the tax bill is higher simply because credits or deductions were missed.

A tax professional can:

• Review past returns

• Check for errors

• Claim missing deductions

• Adjust previous years to lower your total balance

It’s surprisingly common for taxpayers to discover they owe far less than initially thought.

6. Avoid High-Interest Loans to Pay CRA

Some taxpayers consider payday loans, cash advances, or high-interest credit cards to pay CRA immediately. This often leads to worse financial problems.

CRA interest rates are usually lower than most private lenders. Choosing a high-interest option may create long-term debt that’s harder to manage.

When the CRA May Take Collections Action

CRA collections become more serious if:

• You ignore their notices

• You refuse to communicate

• You fail to make agreed payments

Possible actions include:

• Wage garnishment

• Freezing bank accounts

• Contacting your employer

• Placing liens on property

These actions are preventable if you reach out early or work with a tax professional.

How a Tax Professional Can Help

A skilled tax preparer or tax consultant can:

• Negotiate payment arrangements

• Prepare taxpayer relief applications

• Communicate with the CRA on your behalf

• Identify ways to reduce your balance

• Prevent collections actions

• Help you get back on track quickly

At TikiTax, we’ve helped many clients reduce interest, avoid penalties, and manage their CRA balance more effectively.

Final Thoughts

Being unable to pay the CRA right away doesn’t mean you're in trouble — as long as you take action. Whether you need a payment plan, want to apply for relief, or simply need help understanding your options, support is available.

What’s most important is not waiting. The sooner you get help, the easier it is to resolve your balance and move forward confidently.